This solution doesn't help if after mv .bazaar .bazaar.backup/ you also do bzr launchpad-login myusername. To solve the issue in the OP, you need to make sure that you have a valid SSH key (both locally and on Launchpad). See other answer.
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landroniNov 29 '14 at 21:36

You seem to have trouble connecting to Launchpad over SSH. Make sure that you have a public SSH key registered on Launchpad for which you have the private key available locally, and check that Launchpad knows about your username (bzr lp-login <username>).

You certainly don't need to register on launchpad to branch projects. Yes Bazaar will give you a warning that you won't be able to write to launchpad, but that doesn't prevent you from branching or checkout.
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janosAug 10 '12 at 10:05

This is indeed the issue that has been plaguing me. It's not sufficient to set up your GPG keys for Launchpad; you also have to set up the SSH keys! Especially if you have already instructed Launchpad about your username via bzr launchpad-login myusername. Or if you want to commit.
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landroniNov 29 '14 at 21:27